West Texas Intermediate retreated from the biggest gain since September amid speculation a drop in Saudi Arabian oil supply to the market isn’t a signal for production cuts. Brent slid.
Futures are poised for a fourth weekly decline. Saudi Arabia’s crude supplies slipped last month even as production increased, a person familiar with the kingdom’s oil policy said yesterday. Both Brent and WTI have dropped more than 20 percent from this year’s high in June on concern global supply is outpacing demand.
“The Saudis are not cutting production,” said Tariq Zahir, a New York-based commodity fund manager at Tyche Capital Advisors. “They can tolerate low prices. We have plenty of supply and the trend for oil is to go lower.”
WTI for December delivery dropped $1.51, or 1.8 percent, to $80.58 a barrel at 10:34 a.m. on the New York Mercantile Exchange. The volume of all futures traded was about 1 percent below the 100-day average. The contract climbed $1.57, or 2 percent, to $82.09 yesterday. Prices are down 2.6 percent this week.
Brent for December settlement decreased $1.13, or 1.3 percent, to $85.70 a barrel on the London-based ICE Futures Europe exchange. Volume was 32 percent below the 100-day average. Futures are down 0.6 percent this week. The European benchmark crude traded at a premium of $5.04 to WTI on ICE, the most in a month, compared with $4.10 at the end of last week.